The Los Angeles city attorney’s office announced that they filed a lawsuit against Sears, Kohl’s, Macy’s and JC Penney for using fake sale prices to lure in customers. The suit alleges the four retailers posted phony original prices on some products to trick customers into believing that they were getting a bargain.
The city’s attorney Mike Feuer said shoppers should know the truth about the products they are shelling money out for.
Thousands of False Deals
They should also know if a deal is genuine or not. According to court documents, the four retailers actively engaged in misleading or false price advertising to attract customers to their stores. They also used these marketing tactics on thousands of their products.
For example, sears inflated the starting price of a front-load washer to $1,179 when the machine never retailed for over $1,000 on the company’s website. The item sold for $999.99 for six months in a row via the online store.
In Macy’s case, the city’s attorney found it sold a necklace at a 75% discount. The initial price was $120, but the department store sold the item at $30 for the next five months.
All four companies refused to reply to a request for comment.
In California, it is illegal to claim an item is on sale if the store hadn’t sold the product at the initial price within the last three months. Retailers could break the rule if they brief shoppers on the date of the discount.
LA officials now seek penalties of $2,500 for each instance of misleading price advertising. They also want courts to issue an injunction that would bar businesses from engaging in such practices in the future.
The LA attorney’s team argues that the practice is detrimental to consumers because they gain a false perception on the value of a certain product. What’s more, the illegal practice gives retailers an unfair competitive edge because they compete against companies that list the true prices.
The Practice is Widespread
According to a January report, more and more U.S. retailers mislead their customers when it comes to prices. This is why, we routinely see 40% to 50% off deals to item’s list prices. However, the report said not all retailers are being fair when waging the price war. U.S. customers, on the other hand, are increasingly aware that the so called original prices are not exactly accurate.
The tactics are quite old and retailers resorted to them for decades under the moniker of ‘price anchoring.’ Yet, in recent times, the practice is so obvious that customers strike back.
Through this tactics, Kohl’s and JC Penney managed to offer nearly 70% off deals during the Black Friday and Cyber Monday seasons. At this pace, customers hardly found an item on a full price. Customers fired back and sued the retailers for ripping them off through deceptive advertising. The January report found that other retailers use fake prices to attract traffic to their stores including Zara and Bloomingdale’s.
In September, a male customer sued the Spanish clothing retailer Zara for using fake conversion rates from euro to U.S. dollars. The man was upset that he had to pay $17.90 for a shirt (he bought three of them) when the real price would have been $11.26 each.
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